Max W. Berger

Accounting First

Berger graduated from Baruch College in 1968 with a degree in accounting — a discipline that would later let him read a restated balance sheet the way other litigators read a deposition — and received his J.D. from Columbia Law School in 1971, where he edited the Columbia Survey of Human Rights Law under Professor Louis Henkin.

The calling arrived during law school, in a part-time job doing research for a solo plaintiffs' lawyer on an important securities class action. The work joined the two halves of his training: numbers that could conceal, and law that could reveal. After graduation he practiced at Kreindler & Kreindler, and in 1983 he helped found Bernstein Litowitz Berger & Grossmann, where he remains the senior founding partner in the firm's New York and Los Angeles offices.

Cendant: Who Chooses the Lawyers

The Cendant accounting scandal produced a multibillion-dollar recovery and a Third Circuit ruling on who controls the selection of counsel in securities class actions.

CalPERS, the New York State Common Retirement Fund, and New York City retirement funds served as the lead-plaintiff group and selected Bernstein Litowitz Berger & Grossmann and Barrack, Rodos & Bacine as counsel, with Berger serving as lead counsel for the class. A district judge initially held an auction for the appointment. The Third Circuit held that the auction conflicted with the Private Securities Litigation Reform Act on the facts before it and confirmed that the lead plaintiff holds the initial power to choose and retain counsel, subject to judicial review. The same firms ultimately received the appointment — and the principle that institutional investors, not courtroom bidding, direct these cases became settled law.

The result matched the principle. The settlement included $2.8515 billion from Cendant, $335 million from Ernst & Young, and half of specified net proceeds from related litigation against the auditor — $3.1865 billion in fixed cash plus contingent value, approved in 2000 together with corporate-governance changes. Behind the number sat the record Berger's team built: financial statements and audit reports scrutinized line by line, private investigators and witness interviews, a forensic accountant and damages experts, formal discovery, and work with Lazard on Cendant's ability to pay.

And then, for twenty-two years, the distributions.

WorldCom: The Gatekeepers Pay

WorldCom's 2004 restatement made approximately $76 billion in adjustments and changed reported net equity from roughly positive $50 billion to roughly negative $20 billion — the largest accounting fraud of its era. Berger's insight was to aim the case not only at the company's executives but at the market's gatekeepers: the banks that underwrote WorldCom's bond offerings and the investigation they performed before those securities entered the market.

The district court refused to give the underwriters a complete reliance defense, held that a jury could find red flags, and treated Arthur Andersen comfort letters as one factor rather than a substitute for reasonable inquiry into unaudited financial information. The rulings left the underwriters responsible for their own reasonable-inquiry duties rather than treating the auditor's work as a complete substitute.

By September 2005, agreements with seventeen underwriters, twelve directors, Arthur Andersen, Bernard Ebbers, Scott Sullivan, David Myers, and Buford Yates totaled $3.558 billion. Combined with the earlier Citigroup agreement, the total was $6.133 billion plus interest — and it included something the securities bar still cites: directors and excess insurers contributed $60.75 million, with $24.75 million paid by the directors personally.

The settlement structure allocated eighty percent to stock and other debt claims and twenty percent to the 2000 and 2001 bond offerings, linking each source of recovery to the defendants, securities, and investor groups covered by the corresponding agreement. A contingent clause in the Andersen agreement produced another $38 million in 2012 — the case still paying investors seven years after the headlines.

Bank of America–Merrill: Governance as Remedy

Investors alleged that Bank of America and Merrill Lynch failed to disclose more than $20 billion in fourth-quarter Merrill losses and bonus arrangements before shareholders voted on the merger. The district court sustained many claims and certified the class in 2012, and a 2013 settlement created a $2.425 billion fund — one of the largest securities recoveries ever — which the Second Circuit affirmed.

The settlement also imposed corporate-governance measures. Directors who failed to receive a majority vote faced stated consequences. Directors had stock-ownership requirements, with noncompliance disclosed. A Corporate Development Committee had to conduct acquisition due diligence, meet with management before board approval, and disclose bonus or incentive arrangements exceeding five percent of an acquisition's price. The compensation committee received heightened independence requirements and an independent consultant. The chief executive and chief financial officer had to review annual and merger proxy statements, and shareholders received an annual say-on-pay vote.

The governance provisions addressed future board decisions while distributions in June 2015, November 2017, June 2020, and September 2021 carried the approved recovery to investors. Across Cendant, WorldCom, and Bank of America, the relief addressed different features of the underlying claims: lead-plaintiff authority, underwriter accountability, and corporate-governance obligations.

The Negotiator

Berger's stature at the settlement table extends across the modern history of securities litigation — including a $627 million recovery for investors in the Wachovia securities litigation and $516 million in the Lehman Brothers securities litigation, negotiated in the wreckage of the financial crisis. Public pension funds direct the cases; Berger works with co-lead counsel, trial and appellate lawyers, experts, administrators, and other case leaders, and stays with the funds through allocation and administration to the final distribution.

In late 2025, the Federal Bar Council selected Berger for the Whitney North Seymour Award for outstanding public service by a private practitioner.

The Camera and the Next Generation

Away from the settlement table, Berger is a lifelong photographer, and proceeds from sales of his photography have supported City Year New York, which supports young volunteers in community service, and inMotion, which provides free legal services to survivors of domestic violence. At Columbia, his giving endowed a Public Interest and Public Service Fellows program.

Four decades after co-founding the firm, Berger continues to represent investors in securities-fraud matters, develop the evidentiary record, negotiate recoveries, and remain involved through allocation and distribution.